The NT dollar rose NT$0.15, or 0.5 percent, to close at NT$32.03 against the US dollar, the strongest close and biggest gain since Dec. 2, in Taipei. Turnover was US$684 million, up from the previous day's US$447 million.

The TAIEX closed 0.24 percent higher yesterday in a technical bounce amid continued concerns over China's plan to draft an anti-secession law aimed at Taiwan, dealers said.

Although bargain-hunting on expectations of a liquidity-driven rally in January curbed the downside after Wall Street's losses overnight, the prevailing holiday mood kept most investors on the sidelines.

The TAIEX closed up 14.63 points at 6,000.57, on turnover of NT$37.05 billion (US$1.15 billion). The benchmark index has risen 1.9 percent this year, helping the local currencies gain 6.1 percent.

"This move by the Korean industry leader was interpreted as [showing the] potential for industry demand growth following recent product price falls," said Alex Huang, an assistant vice president with Barits International Securities (倍利證券).